UPS’ stock sinks after another revenue miss, downbeat outlook

The stock
UPS,
-0.80%
slumped 7.6% in premarket trading, to put them on track to open at the lowest price seen since Nov. 16.

Net income was more than halved to $1.61 billion, or $1.87 a share, from $3.45 billion, or $3.96 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of $2.47 topped the FactSet consensus of $2.46.

Revenue fell 7.8% to $24.92 billion, to miss the FactSet consensus of $25.40 billion. That marked the sixth-straight quarter that revenue missed forecasts.

Among UPS’ business segments, U.S. Domestic Package revenue declined 7.3% to $16.92 billion, below the FactSet consensus of $17.39 billion, and International Package revenue was down 6.9% to $4.61 billion to miss expectations of $4.64 billion.

Meanwhile, Supply Chain Solutions revenue dropped 11.4% to $3.396 but was above the FactSet consensus of $3.388 billion.

Separately, the company raised its quarterly dividend to $1.63 a share, payable on March 8 to shareholders of record on Feb. 20. Based on Monday’s stock closing price of $158.02, the new annual dividend rate implies a dividend yield of 4.13%, which compares with the implied yield for the S&P 500 index
SPX
of 1.44%.

“2023 was a unique and difficult year and through it all we remained focused on controlling what we could control, stayed on strategy and strengthened our foundation for future growth,” said Chief Executive Carol Tomé.

Looking ahead, the company expects 2024 revenue of $92.0 billion to $94.5 billion, which is below the current FactSet consensus of $95.51 billion.

Adjusted operating margin is expected to decline to 10% to 10.6% from 10.9% in 2023.

The stock has gained 13.9% over the past three months through Monday, while the Dow Jones Transportation Average
DJT,
+0.21%
has rallied 15.3% and the Dow Jones Industrial Average
DJIA,
+0.59%
has advanced 16.4%.